ACCT Midterm Ch 1
Which of the following is not a typical note included in an annual report? a) a note describing the auditor's opinion of the management's past and future financial planning for the business b) a note providing more detail about a specific item shown in the financial statements c) a note describing the accounting rules applied in the financial statements d) a note describing financial disclosures about items not appearing in the financial statements
a) a note describing the auditor's opinion of the management's past and future financial planning for the business
Which of the following is true regarding the IS? a) the IS is sometimes called the statement of operations b) the IS reports revenues, expenses, and liabilities c) the IS reports only revenue for which cash was received at the point of sale d) the IS reports the financial position of a business at a particular point in time
a) the IS is sometimes called the statement of operations
Which of the following is not one of the four items required to be shown in the heading of a financial statement? a) the financial statement preparer's name b) the title of the financial statement c) the unit of measure in the financial statement d) the name of the business entity
a) the financial statement preparer's name
Which of the following is not one of the four basic financial statements? a) Balance sheet b) Audit Report c) Income statement d) Statement of cash flows
b) Audit report
Which of the following regrading GAAP is true? a) US GAAP is the body of accounting knowledge followed by all countries in the world b) changes in GAAP can affect the interests of managers and stockholders c) GAAP is abbreviation for generally accepted auditing procedures d) Changes to GAAP must be approved by the Senate Finance Committee
b) changes in GAAP can affect the interests of managers and stockholders
Which of the following regarding RE is false? a) RE is increased by NI and decreased by a net loss b) RE is a component of SE on the balance sheet c) RE is an asset on the balance sheet d) RE represents earnings not distributed to stockholders in the form of dividends
c) RE is an asset on the balance sheet
Which of the following is false regarding the balance sheet? a) the accounts shown on a balance sheet represent the basic accounting equation for a particular business entity b) the RE balance shown on the balance sheet must agree with the ending RE balance shown on the statement of SE c) the balance sheet reports the changes in specific account balances over a period of time d) the balance sheet reports the amount of assets, liabilities, and SE of an accounting entity at a point in time
c) the balance sheet reports the changes in specific account balances over a period of time
Which of the following is true? a) FASB creates SEC b) GAAP creates FASB c) SEC creates AICPA d) FASB creates US GAAP
d) FASB creates US GAAP
Which of the following statements regrading the statement of cash flows is true? a) the statement of cash flows separates cash inflows and outflows into 3 major categories: operating, investing, and financing b) the ending cash balance shown on the statement of cash flows must agree with the amount shown on the balance sheet for the same fiscal period c) the total increase or decrease in cash shown on the statement of cash flows must agree with the "bottom line" reported on the IS d) both a & b are true e) all of the above
d) both a & b
As stated in the audit report the primary responsibility for a company's financial statement lies with a) the owners of the company b) independent financial analysts c) the auditors d) the company's management
d) the company's management